Our View: State’s hole so deep it can’t grow its way out

Illinois has the second-worst unemployment rate in the country. If the state were just average, how much better off would the financial picture be? Not nearly enough.

Journal Standard

Writer

Posted May. 20, 2013 at 12:01 AM
Updated May 20, 2013 at 7:22 PM

Posted May. 20, 2013 at 12:01 AM
Updated May 20, 2013 at 7:22 PM

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Illinois has the second-worst unemployment rate in the country. If the state were just average, how much better off would the financial picture be?

Not nearly enough.

Growth alone will not get Illinois out of its budget hole and wouldn’t be enough to enable the state to pay its bills on time. That’s why cutting pension costs — and holding the line on other spending — is so critical.

To get to the national average unemployment rate, Illinois would have to create 130,000 jobs. Let’s say those jobs all went to men, who’s median annual income is more than what women make.

Using the median income of $51,653 and figuring taxes at 5 percent, that would generate $335,744,500.

That’s a pretty good chunk of change, but no where near enough even to pay the state’s bills. The bill backlog as of Monday was $3.6 billion. The only reason it’s that low — low being a relative term — is that the state just got a bunch of money from people paying their income taxes in April. The number is expected to grow before the state’s fiscal year ends June 30.

If new jobs all went to women, whose median income is $39,149, it would generate $254,468,500 in tax revenue for the state. If it were a mix, using the personal income per capita ($44,815), that would generate about $291 million in new income tax revenue.

Thanks to the Illinois Policy Institute for doing the math for us.

Those calculations do not include corporate taxes for a new business that may start here or move here and do not include other taxes such as sales taxes or property taxes. It’s difficult to figure how much extra that would create, but let’s say it doubles the revenue creating 130,000 jobs does. How about triple? It’s still not nearly enough, although it would make a nice dent.

You could hope for more jobs and better paying jobs, but the fact remains Illinois’ hole is so deep that lawmakers must act on pension costs, which are projected to hit 31 percent of the state’s general fund by fiscal year 2018.

Speaker of the House Mike Madigan has a plan that passed his chamber. Senate President John Cullerton has a plan that passed his chamber. The two plans are well apart in how much would be saved and how generous benefits will be.

Regardless of what passes, a lawsuit from the state’s retirees is inevitable.

Meanwhile, people who do business with the state are waiting to get paid.

Page 2 of 2 - This week’s installment of our Deadbeat Illinois series focused on higher education. Nearly 11 months into this fiscal year, which ends June 30, Illinois’ nine public universities have received about $673.7 million — or about 65 percent — of the $1.2 billion appropriated, said Mike Dropka, spokesman for the comptroller’s office.

The universities probably won’t get the full amount of what they’re owed until December.

Why does it matter? It matters because universities have had to eliminate classes, cut other costs and raise tuition to balance their budgets.

It’s the same, sad story no matter whether it’s a university, a social service, a nursing home or any other entity that does business with the state of Illinois.

Illinois lawmakers have less than two weeks to figure things out. We want more jobs here, but spending, especially pension costs, need to be controlled.